13 July 2020 #Real Estate
The recent Court of Appeal case of Rees -v- Windsor-Clive (2020) considered the interpretation of Landlord’s rights of entry reserved by a lease.
It is quite rare for the issue of reserved rights to come before the courts for detailed consideration and the judgment handed down by Lord Justice Lewison will be of great interest to landowners and developers for its common sense, pragmatic approach.
The facts of the case
The landlord in this case owned a large farm in Wales which had been let to a tenant on two farming tenancies granted in 1965 and 1968. The Landlord obtained outline planning permission for a housing development. In order to comply with certain planning conditions, the landlord needed to gain access to the farm to dig trial pits and boreholes, place surveyor’s reference pins on the land and leave remote bat detectors on the land to monitor the bat population.
The tenancy agreements reserved rights of access to the landlord to gain access to the farm, and one of the tenancies reserved the right for the landlord to gain access to the farm “at all reasonable times for all reasonable purposes”.
First Instance Decision
This case first came before the High Court when the landlord applied for an injunction to stop the tenant interfering with the exercise of his rights of entry. The High Court refused to grant the injunction but held that the landlord was entitled to gain access to the farm to carry out some of the works required by their planning consent.
The tenant appealed against the High Court decision to permit the Landlord to carry out certain activities.
Court of appeal decision
The Court of Appeal dismissed the tenant’s appeal. They determined that if rights of entry had been reserved by a lease for “reasonable purposes”, then those reasonable purposes should be interpreted in the context of the land and all relevant circumstances.
If the right of entry that the Landlord intended to exercise was for a very intrusive purpose, then the court indicated that this might not be a reasonable purpose.
This issue has previously been considered by the Scottish courts in the context of petrol station leases (Possfund Custodial Trustee Limited v Kwik-Fit Properties Limited, Court of Session ), where the court held that it was not envisaged or intended by the parties to the lease that the exercise of the landlords' right of inspection would cause any material disturbance to the tenants, or would result in any material damage to the premises. However, in the Rees case the Court of Appeal stated that:
“what might be intrusive in that context (a lease of a petrol filling station), might not be intrusive in the case of a 51-acre farm. It is, as a I said a question of fact and degree”.
The Court of Appeal made clear that they did not support an overly restrictive interpretation of the reservations contained in the lease, and that the court was not required to give a right of entry the narrowest possible interpretation.
Another interesting point to note from this judgement concerns the principle of non-derogation from grant. The Court of Appeal took the view that a landlord exercising rights in accordance with the terms of a lease would not be derogating from grant, as the rights being exercised formed part of the grant.
At the point of granting a lease, a landlord will often reserve broad rights of access, to encompass a wide range of possible reasons for which they may require access during the term of the lease. The decision in this case should provide comfort to landlords looking to redevelop or repurpose existing buildings, without fear of tenants objecting or seeking to delay the exercise of rights of entry.
It is worth noting that in the Rees case, the tenancy agreement gave the landlord a right of access at all reasonable times and for all reasonable purposes. While this wording is relatively commonplace, not all leases will contain the same reservations, and some may be more limited, particularly where a tenant has legitimate concerns about site security or sensitive equipment on site.
A land owner or developer wishing to gain access to a tenant’s demise in order to carry out surveys or site investigations should check the wording of the lease to ensure they have sufficient rights of entry, and to ensure they comply with any prior notice requirements contained in the lease.
If you would like any advice on any of the issues raised in this article, please contact our Real Estate Team.